HSBC - Good time to top-up ?

[PrefInvestor]

Hi All,

Tempting at under 600 with a close to 7% yield. But lots of potential negatives, HK situation, trade war, loss of CEO, ongoing impairments to name but a few...... Confess I am tempted to top up (I already have about £6,000 worth - but then I always keep my holding sizes pretty low).

Appreciate any considered opinions/thoughts ?.

ATB

Pref

[Alaric]

Appreciate any considered opinions/thoughts ?.

If you look at the dividend history it's been flat in dollars. How would the yield and risk compare to a Pref? On the upside, there is one, unlike a Pref. Easier to cancel the dividend with an Ordinary and the price might fall further.

[PrefInvestor]

Appreciate any considered opinions/thoughts ?.

If you look at the dividend history it's been flat in dollars. How would the yield and risk compare to a Pref? On the upside, there is one, unlike a Pref. Easier to cancel the dividend with an Ordinary and the price might fall further.

Hi Alaric, Well you can get a 6% yield on a number of prefs ATM, 9% if you go for RAVP. And if rates go down then there is a chance of capital gain as well. But I have a full allocation of prefs ATM (about 15%) and am avoiding going too overweight as was my stance prior to March 2018 (when I got burned by the Aviva events).

Have HSBA ever cancelled or cut their dividend ?. Perhaps during the 2008 crisis, would I expect them to do so now - no I think it’s very unlikely myself. But the risks that I mentioned in my opening post might well drive the SP lower I agree.

ATB

Pref

[Gengulphus]

Tempting at under 600 with a close to 7% yield. But lots of potential negatives, HK situation, trade war, loss of CEO, ongoing impairments to name but a few...... Confess I am tempted to top up (I already have about £6,000 worth - but then I always keep my holding sizes pretty low).

Sorry, but how much your existing holding is worth really isn't of any help at all when trying to make suggestions. A £6k holding in a 15-share portfolio with the other 14 holdings at £1k each is hugely overweight at 30% of the total portfolio value of £20k, so definitely not a good top-up. A £6k holding in a 15-share portfolio with the other 14 holdings at £21k each is badly underweight at 2% of the total portfolio value of £300k, so looks a pretty good candidate for a top-up - provided of course that the company still looks like a decent HYP share - and as far as I am concerned, it still does: all the things you mention look to me like short-term considerations that will blow over in the longer term. And of course all sorts of positions between those two are possible, that lead to intermediate verdicts on whether topping HSBC up looks like a good idea.

What would be of more help is the percentage of your total portfolio value in HSBC and the number of holdings in it - that will allow us to judge how overweight or underweight it is compared with the average size of a holding (which as a similar percentage is just 100%/(number of holdings)). And what would be of more help still is a listing of the companies in your HYP with the same information about each, since that will allow us to judge whether e.g. we think you're overweight in the banking sector, or underweight enough in another sector to make it the sensible top-up choice.

Gengulphus

[Gengulphus]

Have HSBA ever cancelled or cut their dividend ?. Perhaps during the 2008 crisis, ...

Yes, they have cut it in the past, and yes, it was in that period - see https://www.dividenddata.co.uk/dividend ... ?epic=HSBA for a nicely-presented picture of that from a secondary source, or https://www.hsbc.com/investors/sharehol ... -timetable to get the data from the horse's mouth.

Gengulphus

[Alaric]

provided of course that the company still looks like a decent HYP share

This is the general board. It doesn't matter whether a share fulfils the arbitrary conditions for being "decent HYP".

HSBC has a 7% yield according to today's dividenddata. Perhaps partly driven by HSBC, the FTSE 100 yield is 4.75%. I would have a concern that HSBC might have a total return of rather less than 7%, implying a loss of capital value. That seem to be the experience of the recent past with a one year total return showing as -8.66%

It may be a recovery share though and if it can maintain the dividend, a cheap price for long term income.

[77ss]

....
This is the general board. It doesn't matter whether a share fulfils the arbitrary conditions for being "decent HYP".

...

Quite right! There a sight too much 'creep' from the HYP board onto this place.

[IanTHughes]

....
This is the general board. It doesn't matter whether a share fulfils the arbitrary conditions for being "decent HYP".

Quite right! There a sight too much 'creep' from the HYP board onto this place.

Are you perhaps suggesting that HYP is not a High Yield Strategy?


Ian

[scrumpyjack]

I would just caution with banks that us private investors (and probably almost all the professional ones too) do not really understand their business.

Bank shares have for so long seemed very cheap but have then become even cheaper and cheaper. It is always jam tomorrow but that tomorrow never seems to come. The market continues to have a very very low opinion of bank shares and it is possible the market turns out to be correct.

I have as much in bank shares as I am comfortable with, so their never ending disappointing performance doesn’t worry me too much but some time ago I decided not to put any more into them no matter how cheap they seem to be.

[PrefInvestor]

Have HSBA ever cancelled or cut their dividend ?. Perhaps during the 2008 crisis, ...

Yes, they have cut it in the past, and yes, it was in that period - see https://www.dividenddata.co.uk/dividend ... ?epic=HSBA for a nicely-presented picture of that from a secondary source, or https://www.hsbc.com/investors/sharehol ... -timetable to get the data from the horse's mouth.

Gengulphus

Hi Gengulphus, Thanks for that dividend information, which is interesting. I remain of the personal opinion that HSBA are very unlikely to cut their dividend.

As for your points regarding my portfolio, I should say immediately that while I have what I believe to be a high yield portfolio it is definitely not a HYP nor do I have any intention of making it into one. And in retrospect it is clear that I should not have posed my original question in the way that I did as it was never really my intention to seek guidance on whether I personally should top up or not, rather what I was really after soliciting views on the issues affecting HSBC and their likelihood of advancing the share price from here (or not).

So apologies if I sent you off on the wrong tack.

ATB

Pref

[TwistedFIREstarter]

Hi Pref

FRTEB from ii here. Long time no... exchange of posts on a discussion forum! Hope you're well.

FWIW HSBC/A is ~2% of my portfolio at today's prices. It seems to be one of the better banks (oxymoron?) with large exposure to Asia, which is where an increasing percentage of global GDP growth is coming from. I can't really see that changing, despite political and other tensions in the short(?) term. I have no plans to sell (or for that matter buy any more).

Looking at a chart HSBA is still in a downtrend but that could change at any time. I think anything starting with a 5 should be a good long term bet but if things hit the fan there's still a chance of it dipping below 500 - maybe mid 400s. But - just my opinion & it's worth what it cost ya

Cheers

Bill

[Dod101]

I have already written on another thread that I think the future for HSBC could well be good, subject of course to the Hong Kong situation being brought under control. The shares were as high as just over £7 as recently as almost exactly one year ago. I have therefore bought some at £6.04 as a trading opportunity because I think they are too low given the good results at the interims for 2019, and the new chairman will be doing all he can (and so will the interim CEO!) to improve things. I think we should see £7 again before too long especially if we get more than a hint of an increased dividend (not that I expect an increase for this year) The current dividend will I think at worst put a floor on the share price.

Things would need to get pretty bad for HSBC shares to get down to £5, in fact a dividend cut would I think be needed. That seems to me to be unlikely, although as I said if HK falls apart, who knows?

HSBC was already my second largest holding and it will now be my largest, although I do not intend to hold the latest batch for too long; if I do well I still have a good dividend.

This is not a recommendation but just my thoughts.

Dod

[Dod101]

The penultimate sentence should have a comma, thus, 'If I do, well I still have a good dividend'.

Dod

[PrefInvestor]

I have already written on another thread that I think the future for HSBC could well be good, subject of course to the Hong Kong situation being brought under control.

Hi Dod, That’s interesting thank you. Sorry that I have obviously missed your other post, did a search for HSBC/HSBA but didn’t find any obvious posts so I thought that there weren’t any. Still not that familiar with the board structure here I’m afraid.

ATB

Pref

[monabri]

I have already written on another thread that I think the future for HSBC could well be good, subject of course to the Hong Kong situation being brought under control.

Hi Dod, That’s interesting thank you. Sorry that I have obviously missed your other post, did a search for HSBC/HSBA but didn’t find any obvious posts so I thought that there weren’t any. Still not that familiar with the board structure here I’m afraid.

ATB

Pref

Have a shufty on the HYP Practical board.

viewtopic.php?p=243500#p243500

viewtopic.php?p=241726#p241726

[Dod101]

I have already written on another thread that I think the future for HSBC could well be good, subject of course to the Hong Kong situation being brought under control.

Hi Dod, That’s interesting thank you. Sorry that I have obviously missed your other post, did a search for HSBC/HSBA but didn’t find any obvious posts so I thought that there weren’t any. Still not that familiar with the board structure here I’m afraid.

Thanks for your interest. As monabri has said the thread I was referring to is on the HYP Practical Board. But what I am saying is not gospel, just my own thoughts but I have put some money where my mouth is!

Dod

[77ss]

I have already written on another thread that I think the future for HSBC could well be good, subject of course to the Hong Kong situation being brought under control.....

Dod

Maybe. I don't have any spare cash at the moment, so adding is moot for me. If the share price falls much more I shall consider moving some funds.

An interesting snippet form Bloomberg:

https://www.bloomberg.com/news/articles ... -diversify

News? Rumour?

[Dod101]

Very interesting. Mark Tucker, the HSBC Chairman will know Aviva's insurance operations well as he spent a long time in the Far East in his previous career.

Dod

[Gengulphus]

provided of course that the company still looks like a decent HYP share

This is the general board. It doesn't matter whether a share fulfils the arbitrary conditions for being "decent HYP".

Quite right - a 'thinko' on my part for which I stand duly corrected. I'll amend what I wrote to "provided of course that the company still looks like a decent share for your portfolio" - it is of course up to PrefInvestor to decide what constitutes a 'decent share' for his or her portfolio.

Gengulphus

[PrefInvestor]

Hi Again All, Decided that discretion was the better part of valour and perhaps better to not increase my HSBA exposure while the HK situation still going on. Also I have a strong preference these days for more diversified investments (ITs, ETFs or OEICs) and a general aversion to the far more volatile world of individual shares (I only hold 6 such shares in total in my portfolio now).

I stuck my top-up cash into Lindsell Train Global Equity fund in the end.........

ATB

Pref